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European Federation of City Farms (EFCF

)

www.cityfarms.org

Developing a viable and sustainable social enterprise on your city farm
1. 2. 3. 4. 5. 6. 7. 8. Where are we today? - A SWOT analysis of your City Farm Your Social Enterprise Scoping Study Your Social Enterprise Feasibility Study Social Enterprise Business Plan – your key document Information, advice and guidance for your feasibility study and business plan Specific Guidance on Budgets and Cash flows Your City Farm – your reputation and your story Consistent appraisal for social enterprise, services, projects, programmes and policies

Introduction It is suggested, that there are four key stages in preparation of your social enterprise. They are marked by four documents that are sequential and build into your final Social Enterprise Business Plan. These are: 1. 2. 3. 4. Where are we today? - A SWOT analysis of your City Farm A Social Enterprise Scoping Study A Social Enterprise Feasibility Study A Social Enterprise Business Plan

Participation The expectation is that all relevant stakeholders, (particularly management committee, members, staff, volunteers and users) are invited to participate in the process. Process • • • • • • • Scoping study – to include SWOT for CF & proposed SE, vision, outcomes Brief appraisal – if answer no – try again or abandon; if yes – Feasibility study – see Feasibility Study guidance paper Full appraisal – if answer no – try again or abandon; if yes – Social enterprise business plan – see Business Plan guidance paper Begin to engaged funders and investors Perhaps pilot some aspects of your social enterprise as appropriate

Timetable You must decide following initial consultation. Five Key Messages • • • • • Social enterprises can and do deliver much needed service outcomes in all areas; The good social enterprises are models of ‘sustainable development in action’; Social Enterprises can deliver where other sectors will not or can not deliver; When support, training and finance is in place, social enterprises can and do succeed; Visible local political, media, public and private sector support can greatly enhance social enterprise viability.

The five 'S's' SD SI SE SC SA Sustainable Development integrating the environmental, social and economic; Social Inclusion, an essential ethical and social justice component of SD; Social Enterprise, creating quality needed services and financial viability; Social Capital creating outcomes of well being and quality of life; Social Auditing, monitoring and evaluating SD, SI, SE & SC - and improving!
Introduction 1.2

Developing a viable and sustainable social enterprise on your city farm | November 2008

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European Federation of City Farms (EFCF)

www.cityfarms.org

The five C’s of social enterprise development Challenge: to assess whether a particular service should be provided at all and, if so, to determine whether it is being provided effectively or if it could be provided better in another way or by another body. Consult: finding out what members/users/customers want and what they are prepared to pay for. Compare: assessing the level, quality and cost of service against that achieved in previous years by other bodies providing similar services. Compete: to determine who can best deliver a particular service at the right quality and optimum cost. Creativity: imaginative problem solving is the cutting edge of innovation. When solutions depend on connections yet to be made, logic is not enough! Ethics, values and social justice Good social enterprises are governed by their ethics; which leads to: • • • Addressing environmental, social and economic outcomes through ethical behaviour; Challenging the status quo to achieve environmental, social and economic outcomes; Where possible, proactively trading and collaborating with other social economy bodies.

This can facilitate: Your 'Social Enterprise advantage' Delivering excellent products and services, with distinct competitive benefits, derived from your ethics and your commitment to the communities you serve'. “Failing to plan……….is planning to fail”

Developing a viable and sustainable social enterprise on your city farm | November 2008

Introduction 2.2

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it is a great self-discipline to complete a good. Use it as a tool to check what position your organisation is in at the moment. Opportunities. Opportunities. See paper 7 Paper 1 1. not prepared in advance of a SWOT analysis. The SWOT is generated from internal debate.European Federation of City Farms (EFCF) www. social and economic) The SWOT analysis is appraised and you decide whether to move to a social enterprise scoping study or address key issues raised in the City Farm SWOT. Finally agreed budgets must reflect internal consistency with the issues raised in the original SWOT analysis. (including EESE . Strengths and Weaknesses are internal. you should end up with a clear understanding of the main thrust of your City Farm. tight. The SWOT should provide answers to such questions as: • • • What do users/clients/customers need? How do they buy? What are our competitors doing? In our SWOT summary we should continually follow with the implied question: Which means that ……? In this way we are forced to think about the implications of the issue itself. it is not just one person's opinion. The SWOT analysis (Strengths. environmental. an analysis commentary and as appropriate an action plan to address any key weaknesses. an organised SWOT.org 1.internal . but more importantly to plan its future direction. Document format and size This is an internal document shared with relevant stakeholders. Remember .cityfarms. If a SWOT is well done. someone else should be able to draft the objectives and outcomes which logically flow from it. identify the issues which should be addressed in the future as a matter of priority. SWOT. but comprehensive.the ethical.external The SWOT analysis of your City Farm helps create baseline information that will inform your viability and sustainability.internal . The SWOT is by definition a summary of key issues. Budgets should be based on a SWOT analysis.external . A SWOT analysis can be used to help to: • • differentiate yourself from your potential competitors. Weaknesses. Having listened to someone presenting a SWOT summary.A SWOT analysis of your City Farm • • • • Strengths Weaknesses Opportunities Threats . and Threats are external. Size: circa 4 -6 pages. Format: Brief introduction.1 Developing a viable and sustainable social enterprise on your city farm | November 2008 3 . and Threats) provides a simple and useful framework for helping you to carry out a review of your organisation or a marketing audit. context and methods used. Where are we today? .

) and importantly your appraisal. sustainability etc. Action learning as ‘people learn best about social enterprise by taking social entrepreneurial action themselves’. Importantly it involves basic research. will feed in to your Feasibility study.2 4 .cityfarms. The chance to ‘avoid making the many mistakes others have made’.org 2. stakeholder consultation. Social enterprise ‘Seeing is believing’ visits. research etc. What service(s) or products you will provide. dreams. users/ other stakeholders • What resources are needed? eg working capital? • As appropriate . expectations and outcomes? How are we going to get there? • What needs to be done? eg involve members. Relevant information. A Social Enterprise Scoping Study Introduction A Social Enterprise Scoping Study gives you an opportunity to explore a number of social enterprise ideas and access their viability. WHAT you aim to do? • • • The aims and objectives of your social enterprise. WHO will be involved? • What skills and personnel are needed WHERE will it take place? HOW you will achieve it – Initial sub-studies • • • • • Governance and management plan Delivery plan Marketing Plan Finance Plan Options and Risk analysis Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 2 1. crazy ideas. staff/volunteers. addressing the key elements (marketing. Where do we want to be in three to five years from today? • • What are your social enterprise ideas? What is your vision.what facilities are needed? • What research and consultation is needed? • Who is going to do what? • How will we monitor and evaluate our progress? The aim is to encourage • • • • ‘Honest and open debate about the potential and limits of your social enterprise. How it addresses identified need. finance etc.European Federation of City Farms (EFCF) www. without carrying out a full feasibility study.

Do nothing (baseline data) • Scenario 2 .cityfarms. employment etc. It is written last but it will need to be positioned at the beginning of the study as an introduction to your report. Check the number of people in your area who are doing similar things – it may be that your idea is completely new and will have a large market. include a cover sheet. to be placed in the appendices. as currently performed or as anticipated. benefits and risks of each alternative considered. finance details. description of your service(s) and/or products. legal. critical risk factors. Your executive summary reflects the scoping study. These rules and regulations importantly help protect your social enterprise. equalities. which may mean you have more difficulty establishing your place in the market.European Federation of City Farms (EFCF) www. benefits and risks necessary to select the best option. Do some market research to see if there is a demand for what you are providing.Social enterprise B • Scenario 4 – a Combination of parts of Social enterprise A & B The Appraisal You will need to estimate the costs. research. Document format and size This is primarily an internal document shared with relevant stakeholders. See paper 8. your social enterprise model. or there might be lots of people doing similar things. Keep this to one page. advisers WHEN do you hope to be operational? Initial market research and marketing It is vital that you have a market for anything you will sell or service you will offer. such as.2 5 . evidence. table of contents.Social enterprise A • Scenario 3 . The additional. Each alternative should provide the necessary information about costs. The costs of doing nothing are the costs of operations and maintenance over time. (and if possible read 5) Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 2 2. marketing. Estimated capital and working capital required. personnel. VAT. contacts page. marketing strategies. insurances. donations in kind. options appraisal and a conclusion. Format: In general. Size: Circa 8 to12 pages depending on number of social enterprise options explored (excluding appendices). Finance Estimated Budgets and if possible estimated Cash Flow forecasts. The option to “do nothing” is likely to provide costs and benefits too. etc. executive summary. your social enterprise context. Options and Risk Analysis For example: • Scenario 1 . Inform yourself on legal issues A social enterprise evolves under a legal framework. financial projections. legal structure requirements. who have been doing them for a long time.org HOW you will monitor and sustain it • • Monitor and Evaluate against targets/outcomes set Identify any added value HOW will you resource the development of a social enterprise • Investment.

finance details.Pessimistic Document format and size This is your key research and planning document shared with relevant stakeholders and possibly with potential funders. Size: Circa 10 to 15 pages (excluding appendices). Key to the Feasibility Study is Options Analysis and Risk Assessment For example: • • • Scenario 1 . table of contents. executive summary. marketing. Try to keep this to one page. contract providers etc. The Appraisal phase. evidence. with whom you have a good relationship. Your feasibility study is an important part of creating your viable and sustainable social enterprise business plan. over the course of a Feasibility Study that many assumptions are revised. Your feasibility study is undertaken to determine and document a social enterprises' viability and sustainability. the next logical step is to proceed with it. It is not uncommon. Your Feasibility Study links and integrates the sub-studies into one coherent whole. Your executive summary reflects your feasibility study appraisal.org 3. Consequently. research. legal. If a social enterprise is seen to be feasible from the outcomes of the study appraisal. and followed by key sections of the business plan.cityfarms.European Federation of City Farms (EFCF) www. A Social Enterprise Feasibility Study Introduction A Social Enterprise Feasibility Study is the working up of your chosen social enterprise option. It is written last but it will need to be positioned at the beginning of the study as an introduction to your report. The additional. new risks identified and the proposed social enterprise’s financial projections changed.Optimistic Scenario 3 . risk assessment etc. individual sub-studies may need to be updated and revised as information from other studies becomes available. Your Feasibility Study attempts to answer: is your social enterprise feasible? Can it be done? Does it make sense? can it really be achieved? . Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 3 1.Expected Scenario 2 . contacts page. partners. Format: Include a cover sheet.is the social enterprise doable? Your Feasibility Study can be considered as a group of sub-studies Your Feasibility Study comprises of a group of interrelated and often interdependent sub-studies as appropriate to your proposed social enterprise. but will include variations to be appraised to come to the best option. verifies whether the proposed social enterprise is well-founded and is likely to meet the needs of its intended outcomes and beneficiaries. to be placed in the appendices. The research and information uncovered in the feasibility study will support the detailed planning and greatly reduce the research time for the social enterprise business plan.2 6 . The Feasibility Study needs to provide sufficient information to justify acceptance or modification or rejection of the proposed social enterprise for further financing and development.

machinery.org Sub-studies may include: • • • • • • • • • • • • • • • • • Purpose and Objectives People Partnership Working (if applicable) Product(s) Service(s) Market Research Marketing plan Suppliers Procurement (as applicable) Premises Plant. 6 and 8 Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 3 2.2 7 .European Federation of City Farms (EFCF) www.cityfarms.Budgets and Cash Flow forecasts Capital and working capital and investment required Risk assessments See papers 5. equipment and transport (as applicable) Governance Legal aspects Insurances Finances .

Above all. potential contract providers etc. added to. complexity. for example: • • • • • • • • • • • • Executive Summary Introduction to your proposed social enterprise and city farm context. evidence and largely completed all your consultation. what you hope to achieve and how it will operate over a given period. Preparing the Social Enterprise Business Plan The document needs to be a factual reflection of the proposed social enterprise. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 4 1. A Social Enterprise Business Plan – your key document Introduction If you are ready to carry out a social enterprise business plan. table of contents. risk assessment job descriptions etc. but containing enough information to enable sensible decisions to be made. plant. If you need to obtain finance. Your titles and order to form the contents page of the business plan.European Federation of City Farms (EFCF) www. that you are worth supporting. funders. can be amended. marketing. public sector procurement etc. finance details. suppliers. It is written last but it will need to be positioned at the beginning of business plan.depending on its size. legal. funders. your business plan is an absolute necessity for helping to convince funders etc. research.org 4. and followed by key sections of the business plan.cityfarms. so you can see how you are doing compared to your original plan. Format: Include a cover sheet. Refer to it and update it regularly. and the type of social enterprise you are proposing. Try to keep this to two pages. and/or re-ordered as appropriate . Size: Circa 12 to 20 pages (excluding appendices). A business plan is a document that provides a picture in words and figures of your social enterprise. It will help you to develop your idea before any major financial commitments are made. contacts page. you have taken your chosen option forward and have most of your research. Document format and size This is your key document shared with relevant stakeholders. potential partners. to be placed in the appendices. You will need to make sure you include the following: To make it easy to read. evidence. institutions. machinery. customers. Purpose and Objectives) People Partnership Working (if applicable) Product(s) and/or Service(s) Market Research and Marketing plan Suppliers and/or procurement (as applicable) Premises. information. without waffle. (Inc. A professional business plan presentation will reflect your professionalism in being able to deal with users. equipment and transport (as applicable) Governance and legal aspects Finance Risk assessment Appendices These headings. once up and running. advice and guidance.2 8 . Your executive summary reflects the business plan. executive summary. and enable you to meet challenges as you go along. your Social Enterprise Business Plan will be a valuable tool for monitoring performance. The additional. it is best broken down into sections.

2 9 . 6 and 8 Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 4 2. the registered numbers of your charity/company etc). This section should include: • • • • • • An overview of your city farm. what you are seeking to achieve over the life of your social enterprise business plan See papers 5.European Federation of City Farms (EFCF) www.org Purpose and Objectives The Purpose and Objectives section needs to cover a lot of ground by describing your city farm and what it does.cityfarms. Your vision for the future of your city farm. Information relating to the geographical area you work in and the type of members and/or users and/or clients you work with. Your city farms’s legal status (whether it is a charity or a company limited by guarantee. The nature of the work that you undertake – and how you deliver it. Relevant historical information relating to your city farm – information on when how and why it was formed etc. What your objectives are.

outputs and outcomes • • • Inputs: where your money went. you did. social and economic statistics are widely publish and on the Internet. encompassing right conduct and well being.7 10 . you need to check with in case anyone else is using it. Your social enterprise name should reflect your enterprise and be easily remembered. which is held by many philosophers to be more important than moral conduct. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 5 1. it is not necessary to fill these pages with statistics! Rather.cityfarms. reduces the work and time spent during the business plan phase. social and economic situation description provides the introduction to and reasons for the Feasibility Study. advice and guidance for your feasibility study and business plan Introduction The more sub-studies (research. An analysis should provide what relevance the research and figures have to the social enterprise. Information. It is broader than the common conception of analysing ‘right’ and ‘wrong’. WWW research As most environmental.org 5. social and economic situation The ethical. Ethics Ethics is the social justice component of sustainable development. A key aspect of ethics is "well being". environmental. the most important and relevant numbers should be drawn out that relate to your social enterprise. Outputs: what activities etc. calculations etc. Note: Public Sector commissioning and procurement is interested in positive outcomes and added value. Ethics is a major branch of philosophy. EESE: The ethical.European Federation of City Farms (EFCF) www. besides price. Importance should be placed on the analysis and situation. Outcomes: what difference did you make? You need to record your inputs and outputs. but your city farm and your social enterprise needs to concentrate on the outcomes.) that are carried out in the feasibility study phase. environmental. Inputs. It sets the framework in which it takes place. the life worth living or life that is satisfying. Social enterprise name If you are going to trade under a name. This is the most important area to emphasis. More importantly your feasibility study appraisal is more robust and the business plan is much easier to assemble. evidence.

a survey of similar or related services provided (or planned) by other organisations. new skills. experience. You should include a description of how much your proposal will cost and how you will fund it. such as Social taxes. Donations in Kind . This evidence could include an analysis of the need for the proposal. Local economy spend (multiplier effects). ‘Value added’ services.such as gaining qualifications. Risk analysis and other analysis tools are useful. including details on how much of your funding package is already secured and when you expect any outstanding funding to be secured. and the other options you have explored to fund your proposal. (These are easily calculated). but most require qualitative measures as well.European Federation of City Farms (EFCF) www.such as reducing costs. Service users outcomes such as gaining confidence.cityfarms. Bringing in external investment and creating outcomes for the city farm and often for the local economy. how you will do it and how you will know whether or not you have been successful. promoted and evaluated. You should explain why an investment is required.. why you want to do it. This should include a description of what you propose to do. • • • • • • • • • Number of jobs created. Certainly the techniques described can be useful – but all you really need to do is consider the world in which your organisation operates. well being. and/or an options appraisal to show that you have considered different ways of achieving your objectives. staffed. but what you need to do here is analyse what is happening in the world inside and outside your organisation. PEST. Potential funders need to understand how your proposal differs from what you do now and why you think it is needed. qualifications. confidence.org Examples of outcomes People. Temporary jobs created (such as building work). Business rates. enhanced quality of life. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 5 2. making friends etc. VAT. A section which relates specifically to your social enterprise for which you are seeking investment.7 11 . Additional taxes paid to government. The simplest qualitative method is for the beneficiary to write (or dictate) their outcomes and sign and date. Your Plan should aim to provide evidence of that need and to explain why it is the best option to meet your aims. making friends etc. Analysis The importance of SWOT. This section should also include detail about how the funded social enterprise would be managed. A good Business Plan is one that: • • • • • shows that your plans are feasible and realistic helps you plan for the future and assess your strengths and weaknesses helps spot future opportunities and threats helps to identify risks and how you will deal with them shows how you will monitor success and manage any setbacks The Work You Do In this section you need to provide an overview of all your city farm’s current activities and how they fit together as well as detail on each individual product or service. local area and wider society outcomes – some are quantitative. Staff and volunteer development .. enhancing skills.

and provide details of the roles and responsibilities of all of the people involved. trainees or volunteers you will have to recruit. both are designed to make organisations think about their future and help to ensure that all necessary elements have been included in the Plan. PEST analysis means considering the wider environment in which your organisation operates – using Political.org SWOT analysis means looking at the Strengths and Weaknesses of your social enterprise and the Opportunities and Threats that face it in the future. There are many definitions of risk that vary by specific application and situational context. this should be explained in as much detail as possible. they could be included in the Appendices. In some texts risk is described as a situation which would lead to negative consequences. directors involved in the management of the social enterprise. If CVs are available. volunteers and paid staff. explain your pricing policy and how it relates to your competitors. along with the job descriptions of any staff. Are there any "extras" you will sell in addition to the main product or service? You should define the full range of the product or service you intend to offer. Partnership Working You should identify any partnerships you have. including. The crucial points.cityfarms. One is that risk is an issue. Products and/or services The level of detail required in this section will depend on what service (s) you are providing. Qualitatively. risk is proportional to both the expected losses which may be caused by an event and to the probability of this event. outlining the benefits to your customers/users. Market Research and Marketing This is one of the most important sections of your social enterprise business plan. set the background for the rest of your Plan. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 5 3. The less well known it is. If relevant. Strengths and Weaknesses are essentially internal issues and usually Opportunities & Threats are external. The definition risk often simply is: Risk = (probability of risk occurring) x (impact of risk occurring) People This is a description of you and any other key people (except any partners. or intend to have. in addition to the names of the people are: • • • • work experience and past training experience of the sector into which you are going or already operating any relevant qualifications held what staff you will require now or in the period covered by the business plan You should show what the organisational structure will look like. drawings or photographs. Letters of intent or some form of written evidence of the partnership should be attached in the Appendices. Environmental. It is important to explain how the partnership will work. In the case of a service. and what the monitoring arrangements will be. Greater loss and greater event likelihood result in a greater overall risk. the more detail required. for example roles and responsibilities. These. like the SWOT analysis. For example. in order to achieve your aims.European Federation of City Farms (EFCF) www. trainees. which you should outline in a separate section).7 12 . More than anything else. Social and Technological. which can be avoided or mitigated (eg a potential problem that has to be fixed) Risk is described both qualitatively and quantitatively. and give their contact details. management. where possible. Risk analysis is the comparison of the risk of a situation to its related benefits.

who have been doing them for a long time.7 13 . One supplier can start dictating terms from a position of strength. static or declining if there is a seasonal cycle who your customers/users are – for example general public. location. try not to let them know! Public Sector contracts are similar! Markets It is vital that you have a market for anything you will sell or service you will offer. media You should be able to show that there is a clear demand for what you are providing. Check the number of people in your area who are doing similar things – it may be that your idea is completely new and will have a large market. List their names and locations as appropriate what advantages. Your research should be able to show: • • • • • • • what area you will be covering and how large the potential need is whether the need is growing. Explain what would happen if you relied on one supplier through a contractual agreement which was not renewed. key information provided. Describe any methods you used for market research. community meetings. price lists and so on? what are your terms of trading? how are you going to sell? will you be expected to issue written quotations? how will you get the goods to the customer (where applicable)? what will your opening hours be? how will people reach you? Answer phone. so if at all possible. location) Price: How much you charge based on expected income and expenditure Product: How attractive are your service(s) and/or products People: People are your most important resource Publicity: Attractive. well laid out. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 5 4. Do some market research to see if there is a demand for what you are providing. voluntary groups. email? what image do you project? reflect your image and one element can ruin or enhance your image. schools.org Remember the marketing concepts. for example. • • • • • Place: (some say location. web site. businesses. Also include reference to any documents which identify the local needs you will be addressing. supplies could come from local producers. or there might be lots of people doing similar things. faith communities what. which may mean you have more difficulty establishing your place in the market.cityfarms. telephone. For example. Any figures and details obtained should be included in the Appendices. if any. what is your sales forecast for the next 12 months? Do you have any actual orders yet or letters of intent? Suppliers/procurement You will need to state who will be supplying any materials to you. avoid relying on one supplier . the competition is. surveys or questionnaires.European Federation of City Farms (EFCF) www.and if you cannot avoid it. if any. these competitors have over you and what advantages you have over them Other questions about marketing that you should answer are: • • • • • • • • • • • how will you be promoting the business? What forms of advertising will you use? do you need brochures.

including security. You should include a statement on access to demonstrate that you have considered the needs of all potential users. donations in kind. it may be better to hire or lease.org Note: It should be remembered that without a good marketing and action plan. so check. but you may be exempt from payment. with prices. the professionals you have engaged and your plans for project management. Plant. Legal Aspects A social enterprise evolves under a legal framework. it is a good idea to look at electric or other alternative options (such as pedestrian controlled vehicles). employment ………. etc.7 Developing a viable and sustainable social enterprise on your city farm | November 2008 14 . refurbished or hiring whenever possible. but more importantly they help protect your social enterprise. (ideally with planning permission granted) For significant building work. such as.cityfarms. In some cases. Remember too that some items will need replacing as they wear out. consider: • • • • • how long will these premises be suitable for any costs involved of converting the property for your use. insurances. and what services are provided. Whenever possible. Good first steps could be: ‘seeing is believing’ tours of established and relevant social enterprises Premises Give details of the type of premises you are going into or already occupy and why they are suitable. property proposals will be developed by your architect. especially if you are looking to raise finance. the brief given to your architects. state the type and costs incurred. which involves legal agreements and contracts Licences and/or permits Do you need any licences or permits for handling. most funders expectations of your building plans are to be as well developed as possible. as applicable rental or lease terms. Building Work If your proposal involves building work. you are unlikely to raise funding. loans. Ideally. equalities. machinery and Equipment You should list. you should also provide details your options appraisal. A further consideration is the inclusion or not of partnership working and/or procurement. all the items of major equipment which you need before you can start trading. You should also clearly state the tenure on the property. Paper 5 5. (or similar building professional). It is a good idea to get at least two or three written quotations for each item. VAT. storing or transporting? There may be costs associated with obtaining licences. These rules and regulations must be respected. such as Environmental Health. Detailed financial information to be included under ‘Finance’. the source of your costings. considering second hand. what were the premises used for before? whether planning permission and/or building regulations are required whether any other permission is required. Any quotations obtained for plant and equipment should be included in the Appendices.European Federation of City Farms (EFCF) www. Transport If you need a vehicle. legal structure requirements. State the size. Before committing yourself to a binding contract. and an indication of the progress of your planning application.

although they had a full ‘order book’. A separate. Your figures need to be your best estimate of what will actually happen over the year.cityfarms. Cashflows need to show the actual cash position of your organisation & should. As well as reflecting the actual timing of money moving in and out of the organisation. be submitted in spreadsheet format. Budgets need to list the sources from which you anticipate receiving income during the year and the expenditure you will need to make. The figures should show annual estimates for the current financial year and the 3 following years in the business plan. so check.org Legislation Are you familiar with the various legal requirements which could affect your social enterprise? Insurance What insurance will you taken out? There may be compulsory ones you need. They do not seek to reflect the actual timing of money that flows into and out of your social enterprise. Cash flows aim to ensure that your social enterprise will have enough money in the bank to allow it to pay for all the goods and services it may need throughout the year. They should be submitted as a spreadsheet.7 15 . You will include figures which show how your social enterprise will operate and what monies are expected to flow into and out of it. This needs to show month-by-month figures for the remainder of your current financial year and the subsequent 12 months & then should be projected on an annual basis for 2 more years after that. please comment in your main Plan on which income streams you are certain of. Potential funders and investors pay a lot of attention to it when considering whether or not to support your social enterprise. they did not have enough cash available to pay their bills. in detail. Finance This is an important part of your feasibility study and a critical section of your business plan. again. and should cover your organisation’s finances as a whole. Cash flows also take into account the money available at the start of the year and give a figure for the money that will be available to your social enterprise at the end of the year. Budgets and Cashflows It is essential that your organisation understands that Budgets and Cashflows are very different things. Specific Guidance on Budgets and Cash flow. & which you are not. You will need to include detail of any assumptions you have used in the creation of these spreadsheets (rates of inflation etc) – See paper 6. When you have prepared these figures. more detailed. Ideally funders like to see you commenting on 3 financial scenarios: • • • A realistic projection of your organisation’s development A worst case (the effect of any ‘uncertain’ sources of income failing to be secured) A best case (where income might exceed your realistic projection) They would expect that this work will also help you in assessing the risks for your organisation – and what you will do if they need to be addressed. Also indicate what the effect of reduced income sources would be. Many organisations go bankrupt each year because. the income and expenditure for the social enterprise for which you are bidding for support. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 5 6. Budgets seek to give an overall picture of the levels of income and expenditure that are expected over the year. budget should cover.European Federation of City Farms (EFCF) www.

what security. and if so. how much. Price lists Photographs/drawings/plans Contracts and agreements Job descriptions CVs of key personnel Key letters of support…….European Federation of City Farms (EFCF) www. Include copies (where relevant) of: • • • • • • • • Research evidence Publicity brochures etc. when and from where? How much income in sales/charges/contracts do you expect the social enterprise to get when it is fully established and running? Realistic and evidenced. How much you can put in from secured sources (in cash and kind) • • • • how much funding you are looking to secure. whether explicitly or implicitly. or assess. but differs in that it is explicitly designed to inform the practical decision-making of social enterprises focused on optimising their ethical. Putting your Plan into Practice Include a timeline of key tasks and activities and/or a work plan for the first year of your social enterprise proposal. Social Return on Investment (SROI) analysis builds upon the logic of cost-benefit analysis. you can offer. Income You need to show how much you expect to get and why: • • • • How much have you already got to put in. enabling readers to easily consult the appendices • • • • Budgets and Cash Flow Forecasts Option analysis Risk assessment Summary of options appraisal in scoping study and feasibility study. Cost-benefit analysis (CBA) is a term that refers both to: a formal discipline used to help appraise. both in cash and "in kind"? Do you expect any grants. How long do you think it will take to get the social enterprise fully established? How much the total social enterprise costs are to set up. For loans include repayments. weighing the total expected costs against the total expected benefits of one or more actions in order to choose the best or most profitable option.. Under both definitions the process involves.7 16 Developing a viable and sustainable social enterprise on your city farm | November 2008 . if any.cityfarms. what contingency plans are in place – eg illness. the case for a project or proposal or social enterprise and an informal approach to making decisions of any kind. Business plan appendices This may be a volume two. social and environmental outcomes as well as financial viability. theft.org Including Investment Figures Remember to follow your estimated timing for the project so that you include injections of funding from funders grants and/or loans during the months when you wish to draw down the money. how exactly the money will be used. breakdown of equipment. Paper 5 7. You should explain how you will monitor and review your plan and who will be responsible for doing this.

If you are producing a budget on a spreadsheet and feel the sheet is getting too detailed. but the Local Authority pays the grant in quarterly instalments and 3 months in arrears. Specific Guidance on Budgets and Cash flows Introduction If you have not produced a social enterprise business plan and the associated financial information before there are a number of things that you should bear in mind when creating budgets and cashflows: Budgets Make them as accurate as possible. expenses etc if they are relevant. When you think your budget is complete. business rates etc) and then have the total of this sheet going forward to your overall summary spreadsheet. you might have one for the costs of running your premises (containing items such as heat. sit back and review it carefully. It is unrealistic to expect to pay the same year-on-year – and your staff may be unlikely to continue to work without an increase in their salaries! Make certain you include everything! A budget should contain all the costs of running your organisation – from rent to rates and from the cost of supplies to utility bills. 12 months of the year. Don’t forget to include other staff costs such as National Insurance. That is far from what would actually happen in cash terms . If this pattern were repeated across a number of budget areas. You therefore need to bear this in mind when creating your cashflow – make sure it reflects when the money will actually arrive and when it will leave your account to pay your bills. Do not guess what will you spend on salaries. pensions.org 6. For example.2 17 . light. Does the overall picture seem to reflect your experience of the way the organisation has run over the last few years? Does it ‘feel’ right to you? It is common at this stage to find that some areas have been omitted or even over budgeted and this ‘reality check’ is a good way of finding such errors.cityfarms. Suppose your city farm has a post funded by a grant from the local authority. May and June would come in a single lump sum payment – in September .they are paid every month so it is normal to match up the income and expenditure in a similar fashion.even though the salary payment has to go out each month! This could give you a real problem of paying the salary costs for up to 6 months before receiving any grant towards the costs.European Federation of City Farms (EFCF) www. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 6 1. Cash flow The essential difference between budgets and cashflows is best demonstrated by an example. If there are significant variations between the figures you submit to funders and your organisation’s historic performance you will need to explain any major differences. The person filling the post works full time. A month by month budget would usually show the expenditure on the person’s salary as spread evenly over 12 months and would normally show the income spread over 12 months as well.the cashflow would show the actual situation – so the payment for April. This reflects the way the organisation thinks about employing staff . utilities etc – look at what you have paid previously – or what other people are paying for similar posts. Include an allowance for inflation each year – this will affect the costs of employing staff as well as many other items of expenditure. check what the actual figures are. such cashflow variations could make a significant difference to the amount of cash (often called ‘working capital’) you would need to keep your organisation’s finances in a healthy condition. think about creating a series of sheets all linking to an overall summary spreadsheet.

the year with.cityfarms. In this way funders can be sure that the amount of ‘cash’ shown in your organisation is accurate. The opening balance (the amount of cash your organisation had prior to the start of the cashflow) must link either to the figure in your last set of audited accounts or to the last set of management accounts produced in your organisation.European Federation of City Farms (EFCF) www. Conclusion: Make sure that the same data is provided in a clear and understandable form. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 6 2.2 18 . Include both opening and closing cash balances in your cashflow – since a cashflow seeks to reflect the amount of cash in your social enterprise .org It is easier to construct your budget first and then build your cashflow from that. once you know how much you need to raise or spend then you can think about when it is likely to arrive or leave.how much you started. and will finish.

Your story . but second is your City Farms reputation and your story. resources.1 19 . stories and concepts act like mnemonics Uniting emotion and intellect Stories can recount a complex narrative Your story must be: . (particularly members. expertise and experience And skilled and experienced in networking.Authentic.Comes first. imaginative and creative Democratic. working collaboratively and in partnership Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 7 1. A good story and reputation can attract investment. users and funders are looking for sense and meaning A story permits meaning and memory Lists are hard to remember. volunteers and users) are invited to offer solutions. staff. support and help. well being and a quality of life Maintaining a range of specialist knowledge. transparent and trusted Public service ethos that is responsive and flexible Representative of and good reputation with your members and users Focussed on providing benefits and understanding and meeting identified needs Providing high quality products and services and added value Committed to equalities & sensitive to cultural differences Committed to sustainable development. Open-source co-operation Where. inclusion. your city farm can engender ideas. Has your city farm established a reputation and record of being? • • • • • • • • • • . all stakeholders. actions and commitments from all parts of the community. guided by an agreed set of targets.cityfarms. Your City Farm – your reputation and your story Introduction The people involved in your City Farm are you’re most precious resource.You cannot control it Innovative. open. Starting with shared goals.If you can’t provide it how can others be expected to understand you! • • • • • • • • Your story is critical to your whole existence Potential members.org 7.Is out there Remember .European Federation of City Farms (EFCF) www. backed up by regular and rigorous feedback.

volunteers. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 8 1. projects. Consistent appraisal of the social enterprises. Evaluation and Feedback). partners.org 8. Demonstrate evidence of systems to ensure transparency and accountability for your actions. Appraisal.4 20 . at the same time minimising risk. The purpose of the assessment The purpose of the assessment is to ensure that no service. etc.European Federation of City Farms (EFCF) www. Addressing this conundrum There is a need for a simple and consistent method to ensure all proposals are evaluated before significant funds and resources are committed. etc.cityfarms. Monitoring. collaborators and other stakeholders to:– • • • Improve the position. Consistent appraisal and evaluation of services. programme or project is adopted without first having the answer to these questions: • • Are there better ways to achieve this objective? Are there better uses for these resources? Appraisal and Evaluation Cycle Appraisal and evaluation often form stages of a cycle formalised in the acronym ROAMEF (Rationale. Ensure sound governance of your city farm. Objectives. programmes and policies Introduction Your Management Committee. projects. To set the standard for a clear ‘social enterprise’ case that has evidence and is focussed on identifying and realising the benefits of a proposal. Effective appraisals should not be overly complicated. Remember! Evaluation of your previous initiatives is essential in avoiding any past mistakes and enabling you to constantly learn from experience. key staff. users. It helps your city farm to manage risk and be a learning organisation. services. role and range of services offered and delivered by your organisation. is an important tool in ensuring that your limited resources are used in the most efficient way.. including how past and present activities should be evaluated. members. but need to be carried out carefully as decisions taken at the appraisal stage affect the whole lifecycle of new services. protecting reputation and not overstretching your capacity to deliver effectively. An inherent tension There is an inherent tension between the desire to respond and make the most of the opportunities that exist to develop your city farm.

Targets should be SMART: Specific – Measurable – Achievable – Realistic -Time-bound. Note: shortlists should still try to cover a wide range of potential action including the ‘do minimum/nothing’ option. Paper 8 2. The costs and benefits of options to be valued. they do not provide the opportunity cost and cannot be used to understand the wider costs and benefits. Creating and reviewing options helps you understand the range of action that you may take. but.4 Developing a viable and sustainable social enterprise on your city farm | November 2008 21 .org ROAMEF CYCLE Identifying Objectives and Targets The following questions help to set suitable objectives and outcomes • • • • • • • What are we trying to achieve? What are our objectives? What would be a successful outcome or set of outcomes? Are our objectives consistent with our strategic aims and objectives? How might our objectives and outcomes be measured? Are our objectives defined in a way that they can be monitored? What factors are critical to success? Targets help in producing outputs. delivering outcomes and meeting objectives. This enables you to compare the results between options to help select the best. Income & expenditure budget & cashflows are for the affordability of a proposal. and the net benefits/costs calculated. Ask yourself: What SMART targets can we then set? What targets do we need to meet? Appraising the options This is to help develop a value for money solution that meets your objectives. Reasons for the rejection of excluded options to be recorded.cityfarms.European Federation of City Farms (EFCF) www. • • A shortlist of options to keep the appraisal process manageable.

and understate timings and costs. in terms of calculating project specific risk adjustments and to encourage more accurate costing. For appraisal and evaluation purposes. and an assessment of options’ exposure to uncertainty. Adjustments for optimism bias is designed to complement and encourage existing good practice. A phenomenon of the private. programme or project in achieving its expected outcomes. and delaying the receipt of. economic and political uncertainties on which the success of a proposal depends. tending to overstate benefits. the generation of an expected value. the future is inherently uncertain.4 22 . by increasing estimates of the costs and decreasing. it involves the collection of data relating to the financial management and outcomes of a service etc. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 8 3.European Federation of City Farms (EFCF) www. Assessing Uncertainty An expected value is a useful starting point for understanding the impact of risk between different options. public and social economy sectors.cityfarms. or Abandoning the project because it is too risky Performance management and measurement ‘Performance Management’ involves tracking the success of a service.org Adjusting for Bias and Risks Optimism bias There is a tendency for appraisers to be optimistic. Adjusting for optimism bias To provide a better estimate of a service etc. Preventing and Mitigating Risks and Uncertainty Following the identification and analysis of risks. It may also be helpful to undertake some sensitivity analysis within a scenario. appraisers need next to look at strategies to prevent and mitigate the risks and uncertainties. Addressing optimism bias Appraisers to make explicit adjustments for this bias. The following may be adopted: • • • • • • • • • Consulting early Avoiding irreversible decisions Carrying out pilot and/or scoping studies Building in flexibility from the start Taking precautionary action Transferring risk through contractual arrangements (eg insurance) Developing less risky options Developing different options. Scenarios Scenarios are useful in considering how options may be affected by future uncertainty. Scenarios to be chosen to draw attention to the major technical. Scenarios by asking simple ‘what if’ questions. estimated benefits. But however well risks are identified and analysed. So it is also essential to consider how future uncertainties can affect the choice between options.

modification. Better use of time in “getting it right first time”! Source: This guidance paper has been adapted from.org This provides an essential source of information for: • • • The extent to which objectives/outcomes are being achieved.Measurable – Controllable. Giving an early warning of potential problems. The evaluation should include the following: • • • • • • An assessment. and to ensure that lessons learned are fed into decision-making and to ensure your city farm refines what best achieves the objectives. and appraisal on forecasts and projections. Projects can concentrate on the service/enterprise issues rather than reinventing project processes (or missing them out!). Consistent Appraisal Good Practice paper by John Crowther and Mike Primarolo. The possible need to adapt the service. An important building block in improving your governance and accountability. of what happens A comparison with the target outputs and outcomes Why the outputs and outcomes differed from that foreseen in the appraisal How effective the activity was in achieving its objectives. FCFCG Board Members. The main difference is that evaluation tends to be based on actual data.Predictable . delivery. Conclusions An appraisal process that is: Consistent . programme or project to ensure success. the direct and indirect outcomes of the service etc. quantified where possible. Developing a viable and sustainable social enterprise on your city farm | November 2008 Paper 8 4.Repeatable . But to keep it as simple as possible Benefits include: • • • • • • • • Creation of a “common language” to improve understanding and communication. Reduction of non-value added time in and around projects. for example. who adapted the widely adopted systems set out in the Office of Government Commerce’s publications Managing Successful Programmes. or the continuation. Consistent execution of project processes. Appraisal and evaluation are similar each identifies and measures. Evaluation Evaluation examines a service etc. To be fully effective. or replacement of a service or programme. Monitoring provides information for evaluation. changes in procurement practice. plans for monitoring must form part of the initial planning of a service etc. and why The cost effectiveness of the activity and What the results imply for future management The results should lead to recommendations for the future. where possible.4 23 . Focus on delivering and realising benefits. and Business Benefits Through Project Managementand HM Treasury’s The Green Book.European Federation of City Farms (EFCF) www. Focus on identifying and evaluating risks. against what was expected..Managed .cityfarms.